of appropriated units is unrealistic when one considers that financing for such units must necessarily be additional deficit financing unless Congress either reduces substantially overall military appropriations or increases taxes.

The cost of family housing under title X appears to me to be approximately the same or possibly less than under appropriated funds. The only difference I can see in the cost of construction and operation is the cost of financing. A 25year mortgage has a definite cost from the outset. The use of appropriated funds requires the borrowing of money by the Treasury at going interest rates with a strong probability that it will not be paid back in 25 years. If the period of repayment runs 30 years or longer the cost of appropriated housing will far exceed the cost of the mortgage for a fixed time.

When I first read the bill the thought occurred to me that there was no real reason why the FHA should be in the program at all. I believe the whole insuring risk should be assumed by the military departments. However, an analysis of the reasoning behind the bill revealed that the real function and purpose of having the FHA insure these mortgages at the outset is very fundamental and quite simple. I have found that the lending institutions of this country—namely, the insurance companies, banks, and retirement funds—are all governed by State and National banking laws and State insurance laws as to the kinds of investments they may make. I have been told that perhaps as many as 36 or 37 States had to enact special legislation before lending investment institutions in those States could participate in the FHA insured mortgage program. It takes time, a great deal of time, to get such legislation through the various legislatures. I would estimate that at least 5 years would be required before a Defense Department insured mortgage program could be accepted as an investment by all States. On the other hand, FHA insured mortgages may now be legally accepted in all States. I recommend for this reason that FHA participation in the program be continued until such time as an appropriate timely amendment to this act will transfer to the military departments assumption of the insurance risk. I further recommend that during the interim period of time required to create a real insuring capacity the military assume the obligation to reimburse the FHA insurance fund for any actual losses incurred under this program. If there is a loss, the FHA in its normal procedure would foreclose, pay off the mortgage with debentures, and then would proceed to dispose of the property in the same manner as any other project.

In the event that the sales price obtained was less than the amount of the insurance or debentures paid, the military department concerned would be required to pay such actual loss from available funds or would present such loss to the Congress for appropriations.

It has been brought to my attention that certain witnesses who have testified before the subcommittee on this bill have blown up out of proportion the overhead expense in administering title X housing. It was envisioned that the military would have to set up some type of complicated bookkeeping system in order to convert quarters allowances into mortgage payments. As I see the program from studying the bill and discussing it with those who know something about the legislation, all that should be required is for a monthly check to be sent from one central point with no references at all to the individuals who for the time being will be occupying the units. The bill itself limits the available dollar to the average of the quarters allowances.

I would also like to propose that there be created an Assistant Secretary of Defense for Housing to be charged solely with all policy making and in general coordinating the military family housing program under title X. His office could also take over the insuring of title X mortgages after it is possible to transfer the insuring of such mortgages from FHA to the military. Military family housing is so critical that it should no longer be kicked around as if it were an orphan.

Critical defense housing under title IX just is not possible for military family housing in defense areas. I was advised by two members of the Senate Banking and Currency Committee to initiate an application under title IX for 500 critical defense housing units for Plattsburgh. The application was duly made. Never have I received a greater "runaround" than I did trying to process that application with Housing and Home Finance Agency. The experiences of myself and those from other cities interested in such housing convinced us that Housing and Home Finance Agency wants no part of housing for servicemen. In Plattsburgh we are relying on the ability of the Federal Government to provide all required housing for military families since FHA has frozen regular title II commitments to the average number of 100 to 150 per year heretofore approved.

Even though Plattsburgh has a permanent base, and is literally bulging at the seams, FHA states frankly it will not render assistance.

The shortage of military family housing has become a national disgrace. Enactment of S. 1501 will increase the morale of members of our Armed Forces and save our Nation millions of dollars by keeping trained personnel in the service. Early passage of S. 1501 is necessary. In my opinion, no other present or proposed legislation can meet the existing need.

Senator SPARKMAN. Our next witness will be from the Mobile Homes Manufacturers Association, represented by our former colleague, Scott Lucas. We are glad to have you with us this morning. Mobile homes

STATEMENT OF SCOTT W. LUCAS, ACCOMPANIED BY EDWARD L. WILSON, MANAGING DIRECTOR, AND WILLIAM W. WELSH, FINANCIAL CONSULTANT, MOBILE HOMES MANUFACTURERS ASSOCIATION

Mr. LUCAS. Mr. Chairman and members of the committee. I am very happy to be with you this morning. I notice you have limited the witnesses to 15 minutes. I doubt that I can make it within that time, and I might have to ask unanimous consent for just a few more moments of time.

Senator CAPEHART. You might be able to get 18.
Mr. LUCAS. Thank you, Senator.

My name is Scott W. Lucas. I am a practicing attorney in Washington, D. C. I appear before you today on behalf of the Mobile Homes Manufacturers Association, a trade association whose 61 members account for a large percentage of the mobile homes being manufactured in the United States.

Associated with me this morning are Edward L. Wilson, managing director of the MHMA, and William W. Welsh, financial consultant to the MHMA, who, incidentally, is celebrating his 40th year in the banking business next month. At the conclusion of my statement and your questions of me and my associates, I should like to introduce Mr. Louis Van Selow, a trailer park operator. These gentlemen are prepared to answer any technical questions you may have.

Although the amendments I am urging relate to parks for mobile homes, may I comment first on the mobile homes themselves. The mobile home, as we know it today, did not appear on the scene until after World War II. Prior to that time the units produced by the industry were largely vacation models, known as trailers. The merits of combining mobility with year-round shelter, however, became apparent even in those years and were proved during the wartime period.

During World War II the Government found that mobile homes met urgent needs in rapidly swelling areas near military bases. Individuals also made extensive use of this type of housing at that time. Thus, World War II and national emergencies since that time have made it possible to move the Nation's work forces from place to place and to give immediate shelter to displaced families.

After the war, veterans and construction and defense workers who had been introduced to the mobile home during these years continued to supply most of the demand for this product. They wanted more

complete homes, however; larger ones with more conveniences. It was in these postwar years that mobile living came of age.

Today's mobile home is a complete, independent home on wheels. While basic floor plans are somewhat standardized, with living room in front, bedroom at the rear, and kitchen and bath in between, there are many variations designed to accommodate the different needs of the purchasers.

It is obvious that any facility which houses some 2 million Americans is a real force in our housing economy. This type of housing accommodation is home to military personnel and their families, to defense workers and their families, newlyweds, retired couples, construction and agricultural workers and their families. Furthermore, the Federal Government, by a long series of legislative and executive measures, has recognized the mobile home as a part of the Nation's housing inventory.

At this point I would like to introduce in the record exhibit A, which has the caption "Government Recognition of Trailers," which shows the different measures that Congress enacted from time to time, dealing with mobile homes.

Senator SPARKMAN. Without objection, that will be inserted in the record.

(The document referred to follows:)

GOVERNMENT RECOGNITION OF TRAILERS

1. EXECUTIVE

During the existence of the Controlled Materials Allocation Plan, the Federal Government's housing authority, the Housing and Home Finance Agency was named a claimant agency for house trailers by the Defense Production Administration.

Trailer coach materials allocations were administered by the same division, the Construction Division of the National Production Authority, that administered the allocations for conventional housing.

House trailers have been purchased in quantity by the Federal Government to provide immediate housing accommodations after disasters.

For years the service departments have been using trailer coaches to house military personnel.

The Atomic Energy Commission has cooperated in providing mobile homes as housing for construction workers engaged in building atomic energy installations.

The Office of Civilian Defense is currently engaged in studying the utilization of mobile homes as an answer to the housing problems faced by potentially displaced civilians.

2. LEGISLATIVE

In 1951, recognizing that the bulk of house trailers are used for housing by defense workers, military personnel and others, rather than as a means of transportation, Congress removed the excise tax on house trailers.

The Defense Housing and Community Facilities and Services Act of 1951 (Public Law 139, 82d Cong., approved September 1, 1951) identifies house trailers with prefabricated homes in title V, and in title III authorizes loans to be made for housing which is of mobile character.

The act of Congress providing for family quarters for personnel of the military departments (Public Law 765, 83d Cong., approved September 1, 1954) authorizes the secretaries of military departments to acquire up to 5,000 units of house trailers.

On March 30, 1955, the President signed amendments to the Career Compensation Act, including one which would authorize transportation or reimburse ment to a serviceman who, upon transfer of station, moves his mobile home and baggage and household effects.

Mr. LUCAS. With this brief background of the mobile home, I come to the amendments. They do not, it is to be noted, relate to the Government participation in the financing of the mobile homes, but to the land and improvements where mobile homes are parked.

Almost 85 percent of all mobile homes are designed primarily for semipermanent park use. Every effort must be made to assist the park owner to provide the highest type of facilities, the best standard of construction. To accommodate the increased use of mobile homes, to provide attractive and desirable spaces for mobile homes to rest, and to avoid unsightly and inadequate parks which only discourage the use of the needed housing provided by trailers, the suggestion is made that title II of the National Housing Act be amended so as to authorize FHA insurance of trailer parks. Such an amendment consists of four slight changes in section 207 of the National Housing Act. Note that this amendment requires a high standard of construction, limits the loan to $1,000 per trailer space and $300,000 per mortgage, makes the amortization comparable to rental housing, and calls for the mortgage not exceeding 80 percent of the estimated value of the property when the improvements are completed.

Here is what Prof. L. C. Michelon, former Director of Management Services, Industrial Relations Center, University of Chicago's School of Business, has to say on page 5 of his recently published book, How to Build and Operate a Mobile Home Park. That book, by the way, is on the desk of each Senator, and at least it will be of help in filling up your library if you do not have an opportunity to read it. It is a very interesting book.

The only similarities between the trailers of 1940 and the mobile homes of today are wheels and mobility. Everything else is different-including electrical installations, brakes, heating arrangement, interiors, and frame and body construction. Yes, the change is as great as from a horse and buggy to the automobile.

What has all this done to trailer parks? Briefly, the parks built to accommodate small, nonmodern trailers are obsolete. Their spaces are too small. Roads are not wide enough. Electrical wiring is not heavy enough to handle the loads required by modern kitchens, hot-water heaters, and increased lighting. Such parks generally do not have sewage-disposal systems-or individual coach connections. And, since they were not properly planned, they do not present the attractive community appearance mobile-homeowners are looking for.

The point is clear. Mobile-home parks are an underdeveloped part of our economic structure. Of the more than 12,000 parks in the country, only about 4,000 are approved by the Mobile Homes Manufacturers Association. And, in the face of an increasing demand for new mobile homes and better parks, more and more parks are getting obsolete every day.

Keep in mind, too, the differences between mobile-home parks and motels or efficiency apartments. A mobile-home park has a large part of its facilities underground in the form of sewer lines, electrical connections, water connections. and so on.

I would like to have Mr. Wilson just for a brief time explain to the committee some of the problems involved in connection with these parks with the help of the charts here.

Senator SPARKMAN. All right, sir.

Mr. WILSON. Gentlemen, this particular photograph happens to be a mobile-home park constructed by the National Park Service down at Haines Point. It is one of the nicest in the United States, but it is impossible, as you see, when you look at this to determine the value of the park that is underground. There are curbings, and roadways,

but an attachment connects each one of these mobile homes with sewer facilities, water facilities, and power facilities.

This is a privately owned park near an Army base that provides adequate housing to people who own them and live in them and enjoy them. Again you see a cement patio which is part of the cost of building the park. Also you see the sidewalks here. We do this because so frequently people think that land is the only cost which is involved.

Here is one of a more palatial type out in Arizona, which shows how nicely it can be done. This man, incidentally, is not seeking a bank loan. He has his.

Senator CAPEHART. May I ask a question?

Mr. WILSON. Yes, sir.

Senator CAPEHART. What is the average cost per unit for land, attachments, sewers, etc.?

Mr. WILSON. We will get to it later.

Mr. LUCAS. Yes; we will get to it later.

Mr. WILSON. The land, of course, depends on the particular area that it is in. We recommend in our association where we assist people in park planning that if possible they stay at about $1,000 an acre. it runs more, of course, it increases their cost.

If

Here is a unit which was constructed in Melbourne Beach, Fla., which provides space for 79 units. The land cost $18,000. The total cost, including the other expenses of the 79 units, was $113,000. Senator CAPEHART. That is outside of the trailers?

Mr. WILSON. Yes, sir. You see, trailers are privately owned. Then they are leased at $25 to $30 a month.

Senator CAPEHART. How much per unit would that be?

Mr. WILSON. About $1,500 per unit, or a little more than that.
Senator CAPEHART. How much?

Mr. WILSON. About $1,500 to $1,800 per unit. That is about

average.

In here we separated these figures to show the improvement costs. It is $55,000 as against $113,000 to cover the buildings, laundry buildings, sewer system at $6,000, water system at $8,000, roadways, etc. The point there is that the major cost is in the underground improvements.

Senator CAPEHART. How many trailer camps are there in the United States?

Mr. WILSON. There are approximately 12,000, sir.
Senator CAPEHART. 12,000?

Mr. WILSON. Yes.

Senator CAPEHART. What is the average number of trailers in each? Mr. WILSON. 50 to 75. I would like to explain that 12,000 figure. Another function of our association is to endeavor to improve them and improve the facilities, so that every other year we make a complete inspection of the 12,000 and have a rating system. In order to receive our approval we expect them to reach 85 points out of 100. There is no cost for that rating system because it is strictly carried by us.

Senator CAPEHART. What is the largest number of units in any given park?

Mr. WILSON. There is one at St. Petersburg that runs up to 1,000 units. It happens to be a park which is restricted to retired people. If you work they do not want you.